In a workplace that's become increasingly dominated by instant messaging apps like Slack, global banks (and regulators) are taking unprecedented steps to police how their employees communicate.
HSBC is blocking staff from texting on their work phones, a person familiar with the matter confirmed to CNN. The ban was first reported by Bloomberg.
The move comes after 11 brokerage and investment firms were fined $549 million this August by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over their use of messaging apps like WhatsApp.
What's happening: Banks must follow strict compliance rules for how they use and store their employees' texts and other business communications.
But WhatsApp and other instant messaging apps can be particularly problematic because they're often connected to bankers' personal devices and are difficult for compliance departments to monitor for recordkeeping.
Financial institutions fear that there may be more more missteps and fines to come, so they're proactively limiting how their workers communicate about official business.
"Banks use a wide range of approved channels to communicate in compliance with regulatory obligations," a company spokesperson told CNN. "HSBC, like many other banks, reviews and adjusts functionality on its corporate devices as needed."
HSBC's text ban came just a few months after the London-based bank paid the CFTC $75 million in penalties to settle what the regulator called "manipulative and deceptive trading and record-keeping failures." The British lender also paid $15 million to the SEC for its misuse of WhatsApp.
Private equity companies like the Carlyle Group and Blackstone are also reportedly under investigation for using WhatsApp and Signal to discuss business matters, according to Reuters.
Lenders like Bank of America, Wells Fargo and Citigroup have had to pay more than $2.5 billion since last year for similar recordkeeping violations.
A larger crackdown: Those settlements were part of an ongoing and broad crackdown by regulators into how the industry failed to maintain and preserve electronic communications on personal devices.
The SEC said an investigation uncovered "pervasive and longstanding 'off-channel' communications at a number of banks."
According to the SEC the firms under investigation admitted that from at least 2019, their employees often communicated about business through WhatsApp, iMessage, Signal and other messaging platforms on their personal devices. The SEC also said the firms violated federal securities laws by failing to maintain or preserve the "substantial majority" of these communications.
"Record-keeping failures such as those here undermine our ability to exercise effective regulatory oversight, often at the expense of investors," Sanjay Wadhwa, the SEC's deputy director of enforcement, said in a statement.
The SEC also signaled more action may be on the way.
"We know that other SEC-regulated entities have committed similar violations, and so our work to enforce industry-wide compliance continues," said Wadhwa.
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